They are influenced by problems with determining their tax liabilities – and for a reason

The internal revenue service has not issued comprehensive guidelines on how the estimated 27 million Americans Earning income as influential He should report his income and expenses for tax declarations. This leaves people who earn a living or supplement their income by supporting products and services on social media platforms, such as Instagram and YouTube – and their accountants – are not sure of the tax consequences of their income and expenses, or what types of deductions are justified for people in their work.

We, two bills ScholarsHe published this discovery and other things we discovered about Taxation of content creators in the Journal of Accountancy In autumn 2024

We have found that the treatment of free products that many influential people receive during their work is particularly ambiguous, which is unaware of how to correctly submit tax declarations.

While some tax experts claim that freebies, regardless of whether they are objects such as running shoes and headphones or services, such as a luxury hotel stay, should be treated as taxable income. Other tax specialists claim that free goods and services are usually gifts, not income.

In our research, we analyzed tax regulations, studied various accounting companies specializing in influential clients and examined IRS guidelines that offer tax advice of accounting and influential. While specific audits of influential social media for the purpose of not providing lifestyle expenditure are not publicly documented due to confidentiality, there are common areas in which they can face control of tax authorities.

. IRS issued his most important tips in 2006When he advised artists and celebrities who receive “swags bags” containing costly gifts on Oscars and other high -profile award ceremonies. Other guidelines are based on widely accepted tax regulations regarding business deductions and income recognition.

IRS confirmed that the items received in this way are taxable income, which should be reported on the basis of their fair value. This Tips offered a starting point for influential tax rules. In our opinion, the guidelines do not explain the growing area of ​​uncertainty that affects millions of people and countless companies.

Why does it matter

After years of rapid growth in the influential industry, they were estimated Market value in the amount of over USD 23 billion in 2025.. Some experts Predict that it will reach $ 71 billion By 2032, when brands spend billions more on their partnerships with influential.

Ideally, everyone has signed contracts with business partners, presenting the terms of their compensation. In fact, companies send things or provide free services for influential people, disagreeing with them from above.

While IRS allows the exclusion of gifts from income, many influential people receive unimposed items that generally do not qualify as gifts. This is because the truth The gift does not require anything expected in return.

In contrast, when they receive influence, they often expect that they will promote or recognize these products or services on social media. When influential they get things they don’t operate, returning them is the best way to act in terms of possible tax liability.

Otherwise, the elements they did not ask for could constitute an income that they must report unless the elements are included de minimis – very low value – benefits with fringes.

In influencer marketing, these guidelines It allows you to exclude affordable products or services from their income, if their value is too low to track it. Often, receiving many goods or low -value services from the same company can, however, be taxable income.

Vital costs are also arduous to assess because they operate many purchases for both personal and business purposes. AND Business costs can be deducted with a tax declaration, but not personal.

The tax code is Especially harsh when it comes to clothingUnless it is used only for business purposes. This leaves influential, they are not sure what they should do when buying, say, a coughing scarf, which they promote on tiktok, but also wear when they do matters without any promotional activities. Can this scarf be partially deducted? Cannot be deducted at all? IRS did not tell us enough – or anyone else – to answer this question.

Influences they have to follow everything they receive for free and all expenses related to work, covered during the year. Creating a elementary tracking of the record system for all received goods and services will simplify tax applications. There are some Applications for this.

Which is still unknown

Neither IRS nor Congress indicated whether any guidelines, regulations or regulations that will explain the rules regulating influencer taxation. It is also unclear when IRS controls of influential or appropriate tax matters are underway.

Research is a tiny approach to an engaging academic work.